Submission to Commonwealth Treasury on Crypto asset secondary service providers: Licensing and custody requirements
The Australian Bitcoin Industry Body (ABIB) has submitted key recommendations to the Treasury’s consultation on the proposed licensing and custody requirements for Crypto Asset Secondary Service Providers (CASSPrs). ABIB’s submission underscores the need for regulatory distinctions between Bitcoin and other crypto assets, advocating for a tailored approach that supports innovation while ensuring consumer protection. With a focus on self-custody and the unique security features of Bitcoin, ABIB aims to promote a framework that reflects the specific characteristics of Bitcoin-only service providers.
The submission can be downloaded.
Media Release
For Immediate Release
September 13, 2022
Contact: Ethan Timor, CEO, Australian Bitcoin Industry Body
Email: media@bitcoinindustrybody.org.au
Website: www.bitcoinindustrybody.org.au
Australian Bitcoin Industry Body Submits Recommendations on Crypto Asset Licensing and Custody Requirements
Sydney, Australia – The Australian Bitcoin Industry Body (ABIB) has provided a comprehensive submission in response to the Treasury’s consultation paper on Crypto Asset Secondary Service Providers: Licensing and Custody Requirements. The submission emphasizes the need for a more tailored regulatory framework to address the distinct characteristics of Bitcoin, as opposed to other crypto assets.
ABIB welcomes the opportunity to contribute to the development of a regulatory regime for Crypto Asset Secondary Service Providers (CASSPrs). The organisation outlines several key distinctions necessary for effective regulation, including categorizing service providers based on whether they are custodial or non-custodial, and recognizing Bitcoin as its own asset class separate from other cryptocurrencies.
“Bitcoin operates on a fundamentally different risk profile from other crypto assets, and it is critical that regulations reflect this distinction,” said Ethan Timor, CEO of ABIB. “Bitcoin’s decentralization and global adoption set it apart, and applying the same regulations across all crypto assets would stifle innovation and impose unnecessary burdens on businesses operating within the Bitcoin ecosystem.”
Key Recommendations from ABIB’s Submission:
Custodial vs Non-Custodial Providers: ABIB stresses the importance of differentiating between service providers that take custody of clients’ assets and those that do not. Non-custodial businesses, especially those focused on Bitcoin, should not be subject to the same level of regulation as custodial businesses.
Bitcoin-Only Service Providers: Given Bitcoin’s unique characteristics, such as its decentralization and security features, ABIB advocates for creating a separate category for Bitcoin-only service providers. Unlike many other crypto assets, Bitcoin does not have a central controlling entity, making it inherently safer from risks such as transaction reversals, hacks, or censorship.
Single Definition for Crypto Assets: While ABIB supports having a unified definition of crypto assets across regulatory frameworks, it highlights the need for further clarification. Bitcoin’s decentralization means that its ownership is absolute, unlike other assets where centralized control may exist.
Self-Custody Advocacy: ABIB emphasizes the importance of self-custody, urging consumers to maintain control of their own Bitcoin through hardware wallets, reducing their exposure to risks associated with exchange hacks or collapse.
Addressing the Future of Licensing and Regulation
ABIB also comments on the need to tailor licensing requirements to the risk profiles of different crypto assets. For example, assets such as Non-Fungible Tokens (NFTs) and stablecoins should be regulated separately from Bitcoin. In particular, ABIB advocates for a full-reserve model for custodial service providers and independent external audits that focus on security practices, while opposing intrusive internal audits that could compromise the safety of custodial assets.
“Australia has the opportunity to become a leader in the digital asset space by implementing a regulatory regime that promotes innovation while safeguarding consumer interests,” Timor said. “Our recommendations aim to strike the right balance, ensuring that Bitcoin service providers can operate under a regime that reflects their unique characteristics.”
ABIB looks forward to continuing its dialogue with the Treasury and other stakeholders to develop a robust, fit-for-purpose regulatory framework that fosters innovation and protects consumers.
About the Australian Bitcoin Industry Body (ABIB)
The Australian Bitcoin Industry Body (ABIB) is a Bitcoin-only organization dedicated to advocating for the interests of Bitcoin businesses and users in Australia. ABIB aims to foster innovation, protect consumer interests, and contribute to the development of a supportive regulatory environment for Bitcoin. Through education and collaboration with government and industry, ABIB seeks to ensure that Australia becomes a global leader in the Bitcoin space.
For further inquiries or interview requests, please contact:
Ethan Timor
Email: media@bitcoinindustrybody.org.au
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